Ryan Vlastelica
4 min read
In This Article:
(Bloomberg) -- Investors betting against Palantir Technologies Inc. are throwing in the towel as the software maker’s shares keep pushing higher, aided by fervent retail traders and heightened geopolitical tensions.
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Short interest in Palantir as a percentage of shares available to trade is about 2%, down from a high of 5% in October, according to data from S3 Partners. The stock has rallied nearly 300% over that span, handing short sellers paper losses of roughly $7 billion. Shares extended that gain in early trading Thursday, rising as much as 3.7%, on track for a record close.
Palantir, which makes software used by governments and corporations to analyze large volumes of data, is the best-performing stock in the S&P 500 this year amid excitement about its artificial intelligence products and signs that it’s winning more business from the Trump administration. Palantir is also the most expensive stock in the benchmark, however, with a price to estimated sales ratio of 76 times. Nvidia Corp., by contrast, is priced at 17 times.
The momentum behind Palantir, which helped send shares to a fresh intraday record on Wednesday, has made it dangerous to bet against, even though the valuation is difficult to justify, said Thomas George, president at Grizzle Investment Management.
“The frenzy can go on for longer than the bears or shorts would like, and we’ve seen too many people get their fingers chopped off trying to short something,” George said. “It really feels like the stock is trading on vibes.”
While Palantir stands out on Wall Street for both its lofty multiple and the size of its rally, the stock has proven remarkably resilient, frustrating those betting on a reversal. Some have even likened it to a meme stock, given the heavy interest from retail investors who think demand for AI software will keep Palantir’s revenue expanding at a rapid clip.
Palantir’s work with government and military customers has been in particular focus in recent sessions as US strikes on nuclear facilities in Iran over the weekend raised the specter of a broader conflict in the Middle East. President Donald Trump announced a surprise ceasefire agreement between Israel and Iran following more than a week of drone and missile attacks between the countries.
